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Investing in ULIPs at Low Costs

By Finserv MARKETS - Sep 13,2019
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How to invest in ULIPs at a lower cost

With ULIP investment plans, your investments can multiply through various market-linked return plans while simultaneously you also get a good life insurance cover. Better yet, you also save tax in addition to the investment and insurance cover.

ULIPs present the best of both worlds

On one hand, a traditional life insurance plan will offer life protection and tax benefits without any avenues for wealth creation. On the other hand, mutual funds offer the opportunity to secure good returns, but don’t have an element of life insurance. Somewhere in the middle of this diverse spectrum lie financial products with tax savings benefits and insurance cover called unit linked insurance plans. Among these, ULIP tax benefits with investment plans like the Bajaj Allianz Future Gain available on Finserv MARKETS are significant: the premium paid towards this policy is allowed as a deduction u/s 80C of the Income Tax Act, the withdrawals and payouts are exempt u/s 10(10D) of the Income Tax Act and you don’t even have to pay the long-term capital gains tax on unit linked insurance plans.

One thing is clear: ULIP plans are no longer a costly investment product. Few plans are far better than investing in mutual funds too.

Here are the tips and hacks you need to know about investing in these plans at a lower cost:

1.ULIPs can and should be bought online

Nowadays, it is possible to buy unit linked insurance plans directly online, such as on Finserv MARKETS. When you buy online, they have minimal or zilch costs in the form of charges when compared to the offline mode. Another important point: you can conduct a thorough comparison of the various plans available online.

Compare the sum assured of different ULIPs, the charges related to premium allocation, Fund Management, surrender charges, and the returns at the end of the policy tenure. Because the distribution costs are cut down online, there are some plans that cost even less than mutual funds.

2.Think long-term when it comes to ULIPs: Invest for at least 10+ years

The lock-in period for these plans is 5 years. Essentially it means that you have the option to exit from the plan after the expiry of the 5 years. You can even seek partial withdrawal if there’s a need for emergency funds. However, it is advisable not to. Do not stop paying the premium until maturity. ULIPs are designed to stay invested for a long-term horizon of around 10 years.

3.Purchase high-value life cover and don’t stop premium payments

Drawing from the above point, if you are invested for the longer term, you will be able to accumulate capital over a period of time. It is also advisable to invest in ULIPs with a higher premium. This would mean two things. First, you will save the entire sum paid as premium from taxation. Second, a higher premium is equal to a higher life cover. It is a win-win situation.

Do not stop paying midway. Start a policy only if you are confident about paying all the premiums. The policy should be linked to long-term goals. For emergency and short-term needs, you should keep the money either in liquid funds or fixed deposits. Surrender charges are also deducted if you stop paying before the completion of five years.

4.Consider your age while investing in ULIP Plans

Steer clear of unit linked insurance plans if you are over 50 years of age because of the high mortality charges. Your cover would not be commensurate with the price you will be paying as premia.


If you are a keen investor and want to keep track of the performance of your funds, investing in unit linked insurance plans will serve you well – under the scheme, you will receive policy statements on a regular basis to assess the performance of your funds and consider switching if you are not happy. What are you waiting for, invest your way to a financially secure future with Bajaj Allianz ULIP plans which offer great flexibility and high returns. These plans provide access to funds that are rated highly on Morningstar and that have delivered returns as high as 25% over a 5-year investment horizon.

To know more on ULIP investments in depth, you can check out these blogs:

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522